The world of work has significantly changed over the last 5 years. Firms such as Uber and Deliveroo have spawned a new breed of workers, classified as ‘gig workers’.
A gig worker is someone who “works short term contracts or carries out freelance work”, BBC Online. Gig workers don’t receive a regular wage, instead they are paid per contract, or ‘gig’ they
work.
In the last 5 years the gig economy has been growing at an unprecedented rate. There are around 5 million people working in the gig economy. That is about 15% of the total working population.
This type of work offers great flexibility for the worker but also little security. Gig workers are not entitled to holiday pay, sickness pay and some workers are not paid the minimum wage.
What is the Taylor Review?
The Taylor Review is an independent review into modern working practices. It was carried out by Matthew Taylor, chief executive of the Royal Society of Arts.
The review discusses the implications that modern working practices has on workers’ rights and responsibilities, as well as on employers’ freedoms and obligations.
The findings of the review were released in July 2017. One of the seven principles put forward was to rename the ‘worker’ category as ‘dependent contractor’.
Dependent contractors
If this principle is accepted, there will be three categories of workers; employee, self-employed and dependent contractors. On paper, a dependent contractor effectively sits in the middle of the employee and self-employed category.
Dependent contractors will include those who are employed on a casual, independent. They would be entitled to receive some benefits that employed people get such as holiday pay and sick pay.
Even though they may be entitled to these benefits, they will still not be classified as employed or self-employed.
Tax implication for workers and employers
Colin Ben Nathan, chair of the Chartered Institute of Taxation (CIOT) Employment Taxes Sub-committee states that the current tax system must be updated to reflect this change in worker categories. If not, confusion will remain on how to tax those who are classed as dependent contractors.
Clarification is also needed around Employers NIC. As gig workers are currently classed as self-employed, their employer does not have to pay Employers NIC. Colin Ben Nathan, suggests that going forward the scope of Employers NIC could be broadened into a business levy, meaning businesses would contribute money in to the ‘pot’ as well as workers.